History of Global Arms Transfer, 9 (2020), pp. 3-25 Taiwan’s Security Policy since the Cold War Era: A Review of External Military Assistance and the Development of Indigenous Defence Industry By FU-KUO LIU* Throughout the Cold War era, the ROC’s national security was threatened by the PRC’s enmity. Even in the present day, the ROC’s national security strategy focuses overwhelmingly on addressing military threats from the People’s Liberation Army (PLA). Although the US has, over the years, granted hardware and software to Taiwan to strengthen its defence capabilities, Taiwan has remained far from independent in defence modernisation and national security. For Taiwan, a hard lesson learned from changes to US policy in Asia and other bilateral relations was that the US will only invest in countries that will bear fruit for it. Post-World War Two economic development in Taiwan has been closely linked to political attempts to develop a strong indigenous defence industry, with the aim of ensuring Taiwan would be able to avoid the potential risks associated with changes in US policy. The development of an indigenous defence industry thus became critical and would go on to gain prevailing support in domestic politics. Taiwan’s development of an indigenous defence industry started with three public institutions/organisations and gradually networked more than 200 indigenous SMEs. Over the decades, the country has built a very useful and promising defence industrial chain, reflecting more generally the benefits of economic development for Taiwan. I Introduction Ever since the end of the Second World War, due to the continuing civil war between the Communist Party of China and the Nationalist Government, the fates of China (the People’s Republic of China, the PRC) and Taiwan (Republic of China, the ROC) have been decided not by themselves but by the changing international environment; this was especially the case after the Nationalist Government was defeated in the civil war and consequently relocated to Taiwan in 1949. Defeat in the civil war posed a great threat to the survival of the ROC. Externally, the National government crumbled completely and lost control of the whole mainland to the communists. At this low point, the US government * Author Affiliation: Research Fellow, Institute of International Relations, National Chengchi University, Taipei, Taiwan. 3 FU-KUO LIU under President Truman decided not to resume support of the ROC’s leadership, Chiang Kai-sheik and his government, after the PRC was formally established. The reluctance of the US to support the Nationalists indicated a lack of faith in Chiang Kai-sheik’s leadership and his competence to rule the country. Importantly, Truman’s administration decided to focus its Cold War efforts of containing communism on Europe rather Nationalist China, and this policy would eventually result in the Chinese Communist victory in mainland China.1 Without any external support, the sustainability of the ROC was at tremendous risk. Internally, the Nationalist Government was perceived by the people as being corrupt, ill- fated, inefficient, pathetic and incapable. In no way could the Nationalists gain immediate support from the people of what was fast becoming a panicked and disordered society. At first, the chaotic government arrived in Taiwan in 1949 and the civil war continued. The ROC government did not have sufficient competence to govern, nor to defend itself; the leadership, governmental organisations and overall morale of the ROC were under threat. The political atmosphere was very uncertain and the government needed time to recover and reorganise after its comprehensive defeat. Under such circumstances, the ROC’s fragile defence capabilities were not sufficient to keep the island free from communist military attack. After the Second World War, the ROC had been too exhausted to implement any new nation-building processes alone, let alone regenerate its security policy. It therefore needed external assistance from the US. Then, in June 1950, with the support of the Soviet Union and the PRC, North Korea invaded South Korea. The Korean War disintegrated into a war between the US-led alliance and the Communist Camp. As a result, the Cold War was ignited. The cause of the Korean War was seen by the United States government as a Communist expansion effort attempting to break through the defence line of East Asia and therefore as a threat to US strategic interests; as a result, the First Island Chain (Japan, the Ryukyus, Taiwan, the Philippines and Borneo) and the Second Island Chain (Japan, Guam, Indonesia and Australia) were created to contain communism2, establishing what became known as the ‘hub-and-spoke’ security alliance system, linking bilateral and multilateral security arrangements in the Asia Pacific region. In doing so, the US tightened its military alliances with Japan, Taiwan, South Korea, the Philippines and others in the region. Based on the concept of island chain defence, Taiwan’s strategic importance was substantially recognised and enhanced. The aftermath of the Second World War showed that countries in the region were extremely unlikely to recover fully by themselves, as most of them had suffered or were suffering the setbacks of either civil wars or wars of independence. As a result of Cold War strategic thinking, the US incorporated these Asian allies into its wider strategic picture as a way of supporting its overall defence capabilities and strengthening the American sphere of interest. The US was, on the one hand, committed to protecting and ensuring the security of its allies in the region; on the other hand, it also sought to strengthen its global strategic position against communist expansionism. With these goals in mind, the US helped boost the defence capabilities of those allies to support the defence of the two Island Chains in the West Pacific. By doing so, the US has since then supplied a security umbrella to those regional allies, such as Japan, South Korea, Taiwan et-al. This paper intends to examine the transformation of Taiwan’s security policy under the support of the American security alliance system during the Cold War era. By examining 1 Hamby, A. L., ‘Harry S. Truman: Foreign Affairs’, UVA/ Miller Centre, 2019, https://millercenter.org/ president/truman/foreign-affairs. 2 Yoshihara, T., ‘China’s Vision of its Seascape: The First Island Chain and Chinese Seapower’, Asian Politics & Policy, 4:3 (2012), p. 297. 4 Taiwan’s Security Policy since the Cold War Era security policy, it will also focus on security partnerships between the US and Taiwan. Within such a US-led alliance, American security structures have shaped the fundamental structure of Taiwanese security and supported the emergence of an indigenous defence industry. Since the US has consistently assisted Taiwan in strengthening its defence capabilities in all areas, Taiwan’s defence industry has been generated by American policy during and after the Cold War. This paper will therefore also argue that the development of an indigenous defence industry in Taiwan has been generated by national security concerns about the changing nature of relations between great powers. II Civil War and the Revival of the ROC’s National Security in Taiwan After being defeated in the civil war in mainland China, the Nationalist Government was plunged into disorder and fled to Taiwan. At first, the government which re-established itself in Taiwan realised that, with little access to resources, it was highly vulnerable to military attack. It was therefore critical for the ROC to shift its political centre from Nanjing to Taipei, so as to transform the geopolitical foundation from mainland- to maritime-oriented thinking. Thereafter, the ROC’s national security policy gradually shifted to the security context of the maritime domain. Although the government settled hastily in Taiwan, the first stage of the ROC’s national strategy was overshadowed by military objectives: the early stages of national security policy development aimed to take advantage of Taiwan’s remaining resources to prepare to fight another war. The core focus of national strategy at that time was to recover the mainland, ensure Taiwanese security and develop Taiwan. It was that the country prioritised its strategy. The ROC Nationalist Government, when it first arrived in Taiwan, anticipated winning back the mainland within three to five years of fighting. It therefore did not have a long- term plan to settle in Taiwan, but instead anticipated launching a war back on the mainland. However, the ROC did not have clear support from the US, as the US government hesitated to grant support to the corrupt and incapable Nationalists. In 1949, the PRC was formally established as the communist regime on the mainland. Seen by the US as a new opportunity to be engaged with, the PRC’s position was critical in Asia. To begin with, the US government waited, hoping to formally engage with the PRC, and anticipated abandoning the ROC in due course. Militarily, the ROC was weakened further after it was defeated in the civil war and did not have any external support. Diplomatically, as the PRC gradually gained ground, the ROC was quickly losing the support of the international community. Domestically, the chaotic society in Taiwan resulted from a hasty settlement from mainland China and did not have a clear vision for the future. During this critical period, however, the military forces of the ROC defeated the Chinese Communist Army in the Battle of Guningtou, in October 1949, and the Battle of Dengbu Island, in November 1949. These victories, which successfully deterred the PLA’s ambition to march through quickly to Taiwan, helped drive up confidence and moral in Taiwan. The ROC government decided to restructure its strategic deployment by withdrawing its military from Hainan and Chousang Islands.3 The Nationalists from this point forward would focus more on Taiwan’s defence, making it much harder for PLA to invade.